Cross-regional flows between North America, Europe and Asia-Pacific totaled $30.5 billion in the first half of 2023, representing a year-over-year decrease of 52%, according to CBRE’s Global Real Estate Capital Flows H1 2023 Report. Increased interest rates, softer real estate fundamentals and different pricing expectations between buyer and seller are the main factors driving this decline. Additionally, analysts pointed out that less North American capital flow to Europe due to high interest rates, economic uncertainty and constrained debt markets could be attributed as well.
Europe experienced a two thirds drop in capital inflows compared with last year’s figure of $45.9 billion; however it remains the largest recipient by far for cross regional investments at $14.7 billion for H1 2023 . Inflows into Asia Pacific decreased by approximately one third from 2022’s total at 605 million down to 406 million this year; Japan was an exception receiving strong volume from North America due mainly positive carry exchange rate differences as well as lower finance costs . Meanwhile investment into North American increased 5% YoY totaling 1175 Billion dollars with major acquisitions such as Singapore based GIC’s 14 Billion buyout STORE Capital REIT partnered with Oak Street Real Estate Capital Partners or Japan Mori Trust Co Ltd 2Billion deal SL Green acquiring 49 9% stake 245 Park Avenue New York City being some examples . Markets like Los Angeles Dallas Charlotte were highly targeted foreign investors while Canada saw its highest ever half yearly total coming mostly Singapore targeting Calgary Montreal Toronto areas
Industrial properties were favored amongst global investors resulting 10 8Bn Cross Regional purchases accounting 37 % overall volume 4 8 Bn invested industrial logistics properties US 303 Bn came Singapore Investors Retail sector also increased YoY mainly attributed GIC 14bn buyout STORE Cap REIT but cap rate expansion expected less other sectors Multifamily declined 40 % YOY though investor demand still high housing affordability issues increasing household formation decreasing new development Office Sector dropped 80% YOY most decrease accounted Europe yet fundamentals remain strong APAC office sector dropped 69%.
